Randstad Nv · EURONEXT:RAND
Randstad Nv — Q4 2013 Earnings Presentation
39 slides from Randstad Nv's earnings presentation, Feb 20, 2014
Slide 1: 4th quarter and annual results 2013
4th quarter and annual results 2013 a gradual recovery Ben Noteboom, CEO Robert Jan van de Kraats, CFO Jacques van den Broek Randstad Holding nv February 20, 2014
Slide 2: disclaimer & definitions
disclaimer & definitions Certain statements in this document concern prognoses about the future financial condition, risks, investment plans and the results of operations of Randstad Holding and its operating companies as well as certain plans and objectives. Obviously, such prognoses involve risks
Slide 3: agenda
agenda performance financial results & outlook Q&A appendices 3 February 20, 2014 fourth quarter and annual results 2013
Slide 4: performance
performance 4 February 20, 2014 fourth quarter and annual results 2013
Slide 5: a gradual recovery
a gradual recovery € million Q4 2013 Q4 2012 % organic FY 2013 FY 2012 revenue 4,278 4,234 +2% 16,568 17,087 gross profit 785 772 +4% 3,012 3,102 gross margin 18.4% 18.2% 18.2% 18.2% operating expenses* 628 616 +4% 2,433 2,539 opex as % of revenue 14.7% 14.5% 14.7% 14.9% EBITA* 157 156 +3% 579 563 E
Slide 6: Q4 2013: gradual recovery in Europe
Q4 2013: gradual recovery in Europe YoY Randstad growth development growth in Germany, Belgium, Iberia, UK, Italy, Switzerland, Poland gradual improvement and focus on profitability in North America continued growth in Japan and emerging markets from +1.3% in October to +2.9% in December, and +3.2%
Slide 7: North America: reinvesting in growth
North America: reinvesting in growth continued improvement gross margin - revenue -/-2% (Q3: -/-3%) - strong negative impact from FX performance North America US staffing & inhouse, GP up 1% - revenue trend improving - strong perm (+32%) and good performance RIS - record profitability, Q4 and full y
Slide 8: France: gradual improvement
France: gradual improvement revenue down 2% (Q3: -/- 6%) - improving trend through the quarter - solid growth at inhouse performance France - Professionals rather stable at -11% YoY gross profit up 10% YoY - GM up 180 bps due to impact CICE costs up 11% YoY - FTEs down by 4% sequentially - bonus cos
Slide 9: the Netherlands: good profitability
the Netherlands: good profitability incremental conversion ratio of 179% revenue at 0% (Q3: -/-4%) - focus on client profitability and delivery models - RNL at +3% (Q3: -/-1%), Tempo-Team to -/-5% performance the Netherlands - Yacht improved to -/-2%, strong profitability gross margin improving - hi
Slide 10: Germany: strengthening growth
Germany: strengthening growth revenue at +9% (Q3: +4%) - significant price effect (+7%), but smaller vs. Q3 - good growth in IT and inhouse performance Germany - new CLA implemented in November 2013 gross margin impacted by CLA change - higher wages - change calculation method holiday and sick pay -
Slide 11: Belgium: back to growth
Belgium: back to growth recovery ratio of 139% revenue +1% (Q3: -/-6%) - stable trend throughout the quarter - improving trend in administrative segment performance Belgium - inhouse at -/-14% (Q3: -/- 17%) - growth in professionals due to strong perm focus on profitability - client profitability -
Slide 12: UK: continued growth
UK: continued growth revenue +7% (Q3: + 5%) - revenue strongly impacted by negative FX - continued growth in professionals (+11%) performance UK - led by education, construction and finance - trend at inhouse impoved to -/-3% (Q3: -/-14%) - good growth in MSP and RPO - perm fees grew by 2% (Q3: -/-
Slide 13: Iberia: strong conversion
Iberia: strong conversion Spain - revenue to +2% (Q3: 0%) - growth driven by logistics and manufacturing sectors performance Iberia - lower volumes automotive, harbor - solid growth in Professionals (mainly perm) and HRS - completion of integration expected in H1 2014 Portugal - revenue improved to
Slide 14: other regions
other regions Italy up by 7% YoY performance RoE - growth driven by industrial segment - investing in growth - realizing synergies in H1 2014 Switzerland - growth continued at +2% - accelerated demand at inhouse Japan grew by 4% YoY performance RoW - strong growth in logistics and retail - strong op
Slide 15: revenue development per industry
revenue development per industry Segments USA Germany France Netherlands Manufacturing - + o + Automotive ++ ++ ++ ++ Food - - o - Transport ++ + -- + Business services - + - - Financial services -- -- ++ - IT services -- - o o Public sector -- o - ++ Health & social work + - - -- 15 February 20, 20
Slide 16: financial results & outlook
financial results & outlook 16 February 20, 2014 fourth quarter and annual results 2013
Slide 17: income statement Q4 2013
income statement Q4 2013 € million Q4 2013 Q4 2012 % change % organic revenue 4,278 4,234 +1% +2% gross profit 785 772 +2% +4% gross margin 18.4% 18.2% operating expenses* 628 616 +2% +4% opex as % of revenue 14.7% 14.5% EBITA* 157 156 +1% +3% EBITA margin* 3.7% 3.7% integration costs & one-offs 37
Slide 18: Q4 2013: financial key points
Q4 2013: financial key points free cash flow amounted to € 22M vs. € 369M LY - impacted by payment to Dutch tax authority of € 131M - increased working capital requirements due to growth vs. decline LY - Q3 2013 strong quarter due to favorable timing quarter-end - payment of provisions leverage rati
Slide 19: segment performance, focus on delivery models
segment performance, focus on delivery models Staffing in € M Q4 2013 Q4 2012 % organic* focus on revenue quality in revenue 2,578.2 2,607.5 North America gradual improving trend across Europe EBITA 100.3 103.0 profitable growth in HRS EBITA margin 3.9% 4.0% (Q4 revenue: € 285M) marketing investment
Slide 20: gross margin bridge
gross margin bridge YoY gross margin development + 0.1% + 0.2% + 0.2% -/- 0.1% -/- 0.2% margin expansion North America and RoW perm fees were 7.8% of GP (vs. 7.9% LY) - organic growth of 6% YoY CICE benefits in France - negative impact FX legislative changes NL & Germany continued focus on client pr
Slide 21: operating expenses bridge
operating expenses bridge sequential OPEX development in € M additional marketing and bonus costs +4 +3 +1 +3 significant FX impact +13 -1 -1 -6 corporate costs up due to Dutch crisis tax 592 601 YoY OPEX development in € M significant FX impact +7 +3 USG added € 17M +15 +17 -2 -3 -2 synergies from
Slide 22: FY 2013: financial key points
FY 2013: financial key points gradual recovery since Q2 2013, mainly across most European countries acquisition of activities from USG in 6 European countries productivity (GP/FTE) up 2% YoY strong recovery ratio in 2013 of 118% underlying EBITA up 3%: - strong cost control - investments marketing -
Slide 23: income statement FY 2013
income statement FY 2013 € million FY 2013 FY 2012 % organic revenue 16,568 17,087 -/-1% gross profit 3,012 3,102 -/-1% gross margin 18.2% 18.2% operating expenses* 2,433 2,539 -/-2% opex as % of revenue 14.7% 14.9% underlying EBITA 579 563 +5% underlying EBITA margin 3.5% 3.3% one-offs -/- 49 -/- 9
Slide 24: net debt down by € 335M
net debt down by € 335M leverage ratio at 1.2 and improved working capital management € million December 31, 2013 December 31, 2012 goodwill and intangible assets 2,665 2,943 operating working capital 457 528 net tax assets 497 340 other assets and liabilities 50 10 invested capital 3,669 3,821 equi
Slide 25: free cash flow to € 293M
free cash flow to € 293M mainly reflecting payment to Dutch tax authority and payment of restructuring provisions € million 2013 2012 EBITDA 598 548 release of OWC 78 84 income taxes paid -/- 246 -/- 140 provisions -/- 51 17 net additions in PPE and software -/- 45 -/- 61 other items -/- 38 20 finan
Slide 26: dividend policy 2013
dividend policy 2013 1 dividend policy as from 2013: - policy in line with strategic targets - payout range of 40-50% of adjusted EPS - 40%, unless financial position allows for a higher payout-% - optional dividend: - leverage ratio < 2.0x: optional dividend - leverage ratio < 2.5x: optional divide
Slide 27: outlook Q1
outlook Q1 organic revenue/wd in January at +3.2% vs. +2.9% in December - gradual improvement throughout Q4 2013 - significant FX impact challenging weather conditions in US in Jan/Feb comparison base 2% tougher into Q1 2014 (Jan 2013: -/-5%, March 2013: -/- 3%) same number of working days as last y
Slide 28: growth drivers & strategy
growth drivers & strategy 28 February 20, 2014 fourth quarter and annual results 2013
Slide 29: our priorities
our priorities Client total talent architecture Staffing Professionals Inhouse HRS leverage our expertise implementing global expand in white-collar grow in MSP and RPO in specialty staffing concept per segment and professionals support TTA approach: focus on permanent focus on permanent increase sh
Slide 30: setting the ambition
setting the ambition profitable organic growth through activity-based field steering grow to 5-6% EBITA - grow in profitable markets - improve margin - increase productivity activity-based field steering - market validation - funnel management (temp & perm) growth - weekly activity mgt management ac
Slide 31: portfolio change EB
portfolio change EB Executive Board member Country Responsibility Functional Areas Jacques van den Broek, Germany, UK, Australia, New Business Concept Development; Global Client chairman & CEO Zealand, China, Hong Kong, Solutions; HR; Marketing & Communications; Singapore & Malaysia Public Affairs;
Slide 32: randstad
™- randstad Staffing | Professionals | Search & Selection | HR Solutions | Inhouse Services SA
Slide 33: appendices
™- randstad Staffing | Professionals | Search & Selection | HR Solutions | Inhouse Services appendices
Slide 34: financing: fixed vs. floating interest rates
financing: fixed vs. floating interest rates 10 year historic interest rates comparison 1M vs. 5Y average fixed rate = 2.9% average floating rate = 1.8% January 2004 December 2013 we use floating interest rates as a natural hedge - spread above Euribor of 50-115 bps 34 February 20, 2014 fourth quart
Slide 35: revenue split Q4 2013
revenue split Q4 2013 geographical area revenue categories 35 February 20, 2014 fourth quarter and annual results 2013
Slide 36: EBITA breakdown by geography
EBITA breakdown by geography Q4 2013 Q4 2012 12% 21% 36 February 20, 2014 fourth quarter and annual results 2013
Slide 37: outlets by region
outlets* by region end of period Q4 2013 Q3 2013 Q2 2013 Q1 2013 Q4 2012 North America 1,055 1,067 1,060 1,053 1,041 France 791 849 863 866 868 the Netherlands 672 662 679 688 634 Germany 557 553 547 539 558 Belgium/Lux 307 319 321 320 344 United Kingdom 147 155 155 160 203 Iberia 405 416 252 253 26
Slide 38: corporate employees by region
corporate employees by region average Q4 2013 Q3 2013 Q2 2013 Q1 2013 Q4 2012 North America 6,320 6,260 6,230 6,160 6,300 France 3,480 3,630 3,620 3,630 3,740 the Netherlands 4,260 4,300 4,270 4,360 4,560 Germany 2,620 2,520 2,480 2,500 2,610 Belgium/Lux 1,800 1,840 1,770 1,890 1,980 United Kingdom
Slide 39: staffing employees by region
staffing employees by region average Q4 2013 Q4 2012 North America 105,600 108,300 France 73,300 76,100 the Netherlands 82,600 87,000 Germany 47,700 47,100 Belgium/Lux 40,900 41,000 United Kingdom 18,500 19,400 Iberia 53,900 44,500 Rest of Europe 52,100 37,400 Rest of World 114,200 116,400 total 588